Governor would consider bad-charity crackdown

There was great rejoicing amongst O.C. firefighters on Sept. 5. 2001: Infamous telemarketer Mitch Gold – who had been raising millions in the name of disabled firefighters, but spending almost all of it on fundraising – had been indicted for charity fraud.

“We’re high-fiving because finally we put this knucklehead to rest,” said Joe Kerr, Orange County Professional Firefighters Association. “Once they put him in jail, we figured that was the end of it.”

But that wasn’t the end of it. A few days later, planes hit the Twin Towers in New York City. “The next thing we know, we’re getting a call from the district attorney in Brooklyn. ‘We have an Association for Firefighters and Paramedics soliciting funds for 9/11 victims. Does that have anything to do with you guys?’”

No, no, no, Kerr explained for what seemed like the thousandth time. The union’s charity had nothing whatsoever to do with the Santa Ana-based Association for Firefighters and Paramedics, which gave just pennies of every dollar to burn victims.

“They resurrected themselves,” Kerr said of the bad charity. “Same group, different players. We tried to get the Brooklyn D.A. to talk to the O.C. D.A. We tried to help tighten down some legislation. We went to the attorney general. We were told there was not a lot anyone could do. They’re walking the line, just skirting the law.”

And even after the state attorney general cracked down, suing the Association for Firefighters and Paramedics in 2009 and forcing it into a settlement agreement that involved years of official monitoring, the charity still collects millions and gives less than two cents of every dollar to the victims it purports to help.

“We’ve been on it, unsuccessfully, for 16 years,” Kerr said. “Our office gets scores to hundreds of phone calls every year from people inquiring, ‘Is this organization legit?’ Which it is not. Are they affiliated with us? No, they are not. We tell people that if someone is doing a phone solicitation, chances are they are not a legitimate firefighting organization. If they are asking you to leave a check on your doorstep, we advise you strongly against doing it.”

So, after all these years, should the power of the great state of California be brought more firmly to bear on charities that exist mainly to line fundraisers’ pockets? Is this not an issue of consumer protection as much as anything else?

“Absolutely,” Kerr said. “Something has to be done. They are preying on the good intentions of people who believe they’re contributing to community firefighters injured or killed in the line of duty. In our opinion, that’s fraudulent. We think the law should be severely tightened.”

WE AGREE

Oregon passed a law in June – the first of its kind in the nation – that will simply yank state and local tax exemptions from charities that devote more than 70 percent of their spending to management and fundraising over a three-year period.

Florida is looking at something like this, too. The Sunshine State’s consumer services commissioner is asking state lawmakers to support increased fines, mandatory background checks for telemarketing employees, and a requirement that charities spend at least 25 percent of donations on those in need, or risk losing their state tax exemption.

Florida’s commissioner also wants the power to deny licenses to charities or solicitors banned by other states and to immediately suspend charities engaging in fraud.

So our question to California lawmakers is simply this: If they can try it in Oregon and Florida, why can’t we try it here?

We are in the process of reaching out to every legislator in the Golden State in an attempt to get this question answered, and Kerr has vowed to bring the firefighters’ perspective to lawmakers as well. Early and off-the-record reaction in Sacramento indicates that the problem is well-known, and there might be some resolve stirring to combat it if we keep banging our heads against the wall long enough.

Gov. Jerry Brown – who as attorney general was the very guy who sued the Association for Firefighters and Paramedics and a half-dozen other bad charities – is empathetic.

Brown spokesman Evan Westrup said this by email: “(W)e generally do not comment on legislation prior to action from the Governor, but any bill that reaches the Governor’s desk would certainly be considered.”

So, that’s a start. C’mon, legislators. Run with it.

Remember, the bar here for charities is set very, very low. Oregon is saying that at least 30 percent must be spent on a charity’s core mission, and Florida is proposing 25 percent. The Better Business Bureau likes to see 65 percent of spending here, and Charity Navigator likes to see 75 to 85 percent.

Some folks would like to see something stronger than a 25 or 30 percent minimum in California. “Anything below 50 percent going to the charity seems extreme to me,” said Kerr.

'RIP-OFF ARTISTS'

We had a long talk with Ken Berger, executive director of nonprofit watchdog Charity Navigator, about this one.

“A giver needs to continue to be concerned about this – concerned that there are ripoff artists out there,” Berger said. “There’s now a trend – which has a kernel of truth in it – that you shouldn’t just look at overhead when evaluating a charity. We agree – we signed a letter saying that you shouldn’t just look at overhead.

“But now there are a lot of charities saying you shouldn’t look at overhead at all. That it doesn’t matter. But that’s throwing out the baby with bathwater. That’s drinking the Kool-Aid. It’s an argument for a complete lack of accountability. They urge you to look at the quality of programs and results, but when you try to do that with objective measurements, they say they can’t do it, it’s too expensive. It just doesn’t pass the smell test.”

Charity Navigator – which ranks thousands of charities nationwide and reports on how much they’re spending on overhead as well as their meat-and-potatoes programs – is in the midst of trying to find that elusive way to measure results. They’re calling the effort CN 3.0, and the goal is to have each and every nonprofit report publicly on its results – not just its finances.

Precious few do that now. “There are two reasons for that,” Berger said. “One – they just haven’t gotten into the habit of doing it. And a deeper darker reason for many is that there’s just no there there. They have no idea if they’re having an impact. They don’t track performance internally.

“We’re talking about a $1.5 trillion part of the American economy, and the vast majority does not report meaningful results. Period.”

MEASURE IT

“My hope is that, before I retire, it will become the norm for charities to report on their results,” Berger said. “I’m going to give them 20 years. There’s a movement going on right now, efforts to try to encourage, nudge, incentivise them to report results. It is a Herculean task. A big lift. But there are some great charities that have started.”

He points to the Boston-based ROCA, whose mission is to help disengaged and disenfranchised young people move out of violence and poverty. ROCA tracks everything:

In fiscal year 2012-13, it served 469 high-risk young men with a demonstrated history of criminal behavior and a high likelihood for future criminal activity and incarceration.

There were 115 in the last two years of intervention. Of those, 89 percent had no new arrests; 95 percent had no new technical violations; and 69 percent retained employment.

Similar attempts to quantify what the charity dollars are buying are made by the Nurse Family Partnership in Colorado and the Harlem Children’s Home in New York, he said.

In the meantime, it is the responsibility of the IRS and state regulators and attorneys general to ensure that charities are not ripping people off – and it’s a responsibility of the nonprofit sector to police itself.

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